The Shanghai Composite and the Shenzhen A Share stock markets—China’s two largest stock markets—posted large losses yesterday, capping a week of sharp falls. The two markets were down about 13% each. It marked the worst week in China’s stock markets in more than 7 years. Although they are up year-to-date, the sharp losses this week lent weight to speculation that the bubble in the Chinese markets could soon burst. According to Bloomberg,
Fueled by record margin debt and unprecedented numbers of novice investors, China’s market capitalization has tripled in the past year to $9.8 trillion. At 84 times projected earnings, the average stock on mainland exchanges is now almost twice as expensive as it was when the benchmark Shanghai Composite Index peaked in October 2007.
If the Chinese stock market were to fall, it could have dramatic effects both within and outside China. As much as 80 percent of investment in Chinese markets comes from middle-income Chinese citizens, and a sharp decline in their wealth could spark demands for political change.
What do you think? Is China’s stock market a bubble about to burst? If so, what might the effects be on Chinese politics and the legitimacy of the Chinese government? What international effects might a sharp fall in Chinese markets have? How might it affect China’s international influence? Why
It’s important to note that recognition here is not the same as formal diplomatic recognition, though media reports make it difficult to understand the difference. Diplomatic recognition refers to the formal recognition of states and their governments. States will often use diplomatic recognition as a tool to promote or punish particular actions. The most notable examples of this include Taiwan, which the United States recognizes but China does not.
Diplomatic recognition can also take de facto or de jure forms. De facto recognition refers to the informal recognition of a new country. In this sense, Taiwan has de facto recognition by China in so far as China engages in negotiations with the Taiwanese government. But it does not give de jure, or legal, recognition. There is no Chinese ambassador to Taiwan. Similarly, after the Russian Revolution of 1917, Great Britain and the United States offered de facto recognition well before they engaged in the de jure exchange of ambassadors.
So if the United States’ decision via-a-vis Venezuela is not referring to diplomatic recognition, what exactly is it referring to? Here, we’re considering whether or not the United States considers the outcome of the election to be reflective of the will of the people? Were Venezuela’s elections, in other words, free and fair? The United States is effectively asserting they were not, and the government that resulted from them thus lacks legitimacy (and by extension, recognition).
What do you think? Should the United States withhold recognition of the new Venezuelan government? Are Venezuela’s most recent election results reflective of the will of Venezuela’s people? Take the poll or leave a comment below and let us know what you think.
Scotland’s First Minister Alex Salmond (left) and British Prime Minister David Cameron (right) sign an agreement to hold a referendum on Scottish independence in 2014.
Earlier this week, the British and Scottish governments reached an historic agreement that would see Scotland hold a referendum asking voters to decide whether Scotland would become an independent country or remain as part of the United Kingdom. Numerous issues are at stake, not least of which is control of the estimated 20 billion barrels of oil and natural gas located under the North Sea.
There is good reason to think that British Prime Minister David Cameron is making a strong political move. While the Scottish National Party has polled well in recent elections, the idea of Scottish independence is much less popular than the party which supports it. A recent poll found that only 34 percent of Scottish voters supported independence, while more than half believed Scotland’s economy would suffer if it declared independence.
The move towards a referendum on Scottish independence raises one of the classic challenges of global politics: the problem of national sovereignty. The idea of national sovereignty links the concepts of state (the physical territory) and nation (the people who inhabit that territory and share a common sense of belonging). Within a country, the idea of legitimacy links the people and the state through the concept of sovereignty. The right of the state to exercise power, according to political thought since the Enlightenment, is rooted in the social contract. Since the end of World War II, and particularly since the end of the Cold War, the legitimacy of nondemocratic states has been strongly questioned.
The problem, of course, is at what level such popular consent takes place. The historical patterns of development has resulted in international legal boundaries between states which rarely correlate neatly with the common identity of those who inhabit those states. Indeed, it is relatively rare for the geographic boundaries of the political entity of the state and the cultural/ethnic entity of the nation to correlate much at all. Yet the tidy nation-state represents the ideal type of international relations.
Far more common are multinational states, countries in which multiple nations often compete for control of the state. Nigeria is perhaps the most well-known example. There, more than 250 ethnic groups—the three largest of which comprise about two-thirds of the population—compete for power. One of the most important legacies of colonialism in Africa was the creation of lasting political boundaries that bare little correlation to the politics on the ground, often undermining the sovereignty and legitimacy of the post-colonial state.
The status of the United Kingdom is similarly complicated by its history. There, four distinct “countries” are united. England, Scotland, Wales, and Northern Ireland exist as “countries within a country.” Over the past twenty years, political authority has increasingly devolved from the unitary state. Political power has been decentralized away from London and towards regional governments. Independence in Scotland would represent a dramatic culmination of that (admittedly much slower) historical trend.
And other groups might be watching. Around the world, there are countless groups who identify themselves as stateless nations. The Palestinians are perhaps the most well-known, but others include the Basques in Spain, the Tamils in Sri Lanka, the Uighurs in China, the Hmong in Southeast Asia, and the Kurds in Iraq and Turkey
What do you think: Should Scotland declare independence? What would the political, economic, and social implications of such a move likely be? And how would Scottish independence affect the claims of other nationalist groups seeking independence, such as the Basques, Tamils, or Kurds? Take the poll below or leave a comment and let us know what you think.